BR&I Pty Ltd T/A BR&I Pty Ltd
[2023] FWCA 1379
•15 MAY 2023
| [2023] FWCA 1379 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.217 - Application to vary an agreement to remove an ambiguity or uncertainty
BR&I Pty Ltd T/A BR&I Pty Ltd
(AG2022/4629)
TRACE OFFSHORE ENTERPRISE AGREEMENT 2021
| Oil and gas industry | |
| DEPUTY PRESIDENT BINET | PERTH, 15 MAY 2023 |
Application for variation of the TRACE Offshore Enterprise Agreement 2021
On 7 November 2022 BR&I Pty Ltd (BR&I) filed an application (Application) pursuant to section 217 of the Fair Work Act 2009 (Cth) (FW Act) with the Fair Work Commission (FWC). The Application sought that the FWC order that clause 22.1 of the TRACE Offshore Enterprise Agreement 2021 (Agreement) be varied to remove an ambiguity.
The parties to the Agreement are BR&I and employees of BR&I that are engaged in one of the classifications listed in Appendix 2 of the Agreement to perform maintenance and implementation work on offshore facilities operated by INPEX in State or Commonwealth waters off the coast of Western Australia (Employees).
The Agreement commenced operation on 3 August 2021 and has a nominal expiry date of 27 July 2025.[1]
The Agreement was negotiated with BR&I on behalf of Employees by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) and the Australian Workers’ Union (AWU). The CEPU and the AWU (together the Unions) are covered by the Agreement.
Clause 22.1 of the Agreement provides that Employee pay rates and allowances shall increase annually by a nominated percentage or: “… the WA Cost Price Index (calculated based on the March quarter annual result for the relevant year) whichever is greater…”
The variation sought by BR&I is that the word ‘Cost’ in clause 22.1 of the Agreement is replaced with the word ‘Wage’ from the commencement of the operation of the Agreement on 3 August 2021.
On 24 November 2022 the parties participated in conciliation, and subsequently engaged in further discussions but ultimately the issues in dispute could not be resolved.
Directions for the filing of materials in advance of a hearing were issued to the parties on 1 December 2022 (Directions). The Application was listed for hearing in Perth on 17 February 2023 (Hearing).
Permission to be represented
The Directions invited the parties to make submissions as to whether the FWC should grant permission to the parties to be represented. A determination of this issue is necessary to ensure that the manner in which any hearing is conducted is fair and just.[2]
BR&I sought permission to be represented at the Hearing.
Having considered the submissions of the parties, leave was granted to BR&I to be represented pursuant to section 596(2)(a) of the FW Act on the grounds that it would enable the matter to be dealt with more efficiently taking into account the complexity of the matter.
At the Hearing Ms Heather Millar of Counsel (Ms Miller) appeared on behalf of BR&I, Mr Daniel Austin a solicitor employed by the CEPU (Mr Austin) appeared on behalf of the CEPU and Ms Eunice Ong a solicitor employed by the AWU (Ms Ong) appeared on behalf of the AWU.
Evidence
In advance of the Hearing BR&I filed a witness statement and a supplementary witness statement of Mr Tim O’Pray (Mr O’Pray) setting out his evidence in chief.[3]
Mr O’Pray is the Senior People and Culture Business Partner for Ventia Australia Pty Ltd (Ventia) and is responsible for participating in bargaining on behalf of Ventia and its subsidiaries such BR&I. Mr O’Pray represented BR&I in the negotiations for the Agreement.
Mr O’Pray gave further evidence at the Hearing and was cross examined by Ms Ong and Mr Austin.
In advance of the Hearing the AWU filed witness statements setting out the evidence in chief of:
a.Mr Douglas Heath (Mr Heath)[4] – Mr Heath is an organiser employed by the AWU and the Maritime Union of Australia (MUA). Mr Heath was the AWU official with carriage the negotiations for the Agreement on behalf of AWU members covered by the Agreement.
b.Mr Jason Lipscombe (Mr Lipscombe)[5] - Mr Lipscombe is an organiser employed by the AWU and the MUA. Mr Lipscombe was not involved in the negotiations for the Agreement however he is responsible for representing members of the AWU employed in the oil and gas industry.
Mr Heath and Mr Lipscombe gave further evidence in chief at the Hearing and were cross examined by Ms Millar.
The CEPU did not file any witness statements.
The parties jointly prepared and filed a digital court book containing the evidence and submissions of the parties which was admitted at the Hearing and marked as an exhibit (DCB).
Final written submissions were filed by BR&I on 17 March 2023, by the AWU on 27 January 2023 and by the CEPU on 31 March 2023.
In reaching my decision I have considered all the submissions made and the evidence tendered by the parties, even if not expressly referred to in these reasons for decision.
Background
TRACE JV (TRACE) is a joint venture between Ventia and Cegelec to provide maintenance services to INPEX Operations which operates a variety of offshore and onshore oil and gas facilities. BR&I is a subsidiary of Ventia.[6]
Ventia has a range of enterprise agreements covering its TRACE offshore and onshore workforce. [7]
Prior to being covered by the Agreement, employees employed by BR&I and working offshore were covered by the BR & I Pty Ltd Enterprise Agreement 2016 (Previous Agreement). The Previous Agreement covered both onshore and offshore work.[8]
BR&I commenced bargaining with employees for the Agreement on 11 March 2021. [9]
During the bargaining the CEPU and the AWU were appointed bargaining representatives for the Agreement. In addition to the AWU, the MUA also takes a role in bargaining in the offshore oil and gas sector under the banner of the ‘Offshore Alliance’, an alliance between the MUA and AWU. [10]
Mr Heath and Mr Michael Quinn represented the AWU in the negotiations and Mr Damien Clancy (Mr Clancy) represented the CEPU.[11]
On 10 May 2021 Mr Heath sent an email to Mr O’Pray setting out a response to a draft agreement proposed by BR&I. The email provided extensive responses on the draft agreement, including relevantly as follows:[12]
“18. Rates and Allowances, Clause 22.1: (Table to specify the annual increases in rates and allowances being 01 July 2022, 01 July 2023, and 01 July 2024;
19. Rates and Allowances, Clause 22.1: % increase in 2023 and 2024 to be 2.75% or the Wage Price Index whichever is greater;
20. Rates and Allowances, Clause 22.1: Definition of ‘Wage Price Increase’ needs to be defined as measured by the ABS in a particular time period.”
The Wage Price Index is an index published by the Australian Bureau of Statistics which measures changes in the price of labour in unaffected by compositional changes in the labour force, hours worked or employee characteristics. An equivalent index is maintained for each State and Territory as well as a national index. [13]
On 13 May 2021 Mr O’Pray responded by email to Mr Heath stating that:[14]
“As discussed we cannot agree to any escalations at this point until we have our commercial rates confirmed and agreed.”
Mr O’Pray attached to his email a draft of the Agreement which did not specify an index for escalations.[15]
Subsequent copies of drafts of the Agreement and a summary table of changes sent by Mr O’Pray to Mr Heath in May and tendered in these proceedings did not specify an index for escalations.[16]
Mr O’Pray asserts that his reference to ‘commercial rates’ being ‘confirmed and agreed’ was a reference to the percentage increase sought by Mr Heath needing to have INPEX’s approval to be included in the Agreement. [17]
On or around 1 June 2021, a draft of the Agreement was sent by BR&I to INPEX for review by INPEX because the rates and allowances in the Agreement determines the price INPEX are charged by TRACE for the services TRACE provides to INPEX.[18] According to Mr O’Pray the draft of the Agreement sent to INPEX provided for escalations to occur by reference to “WA Wage Price Index”.[19] I note however a copy of this draft of the Agreement was not tendered in these proceedings.
During a discussion with Mr O’Pray late one night during the period in which INPEX were considering the draft of the Agreement, Mr Heath requested that the rates and allowance increases be calculated on the basis of the Consumer Price Index rather than the Wage Price Index.[20]
The Consumer Price Index is an index published by the Australian Bureau of Statistics (ABS) which measures changes in the prices of consumer goods and services purchased by Australian households.[21] The Consumer Price Index is measured in reference to each capital city not to particular States or Territories.
Mr O’Pray concedes that he told Mr Heath that he did not care which index was used given they were similar. With the intention of discussing or obtaining approval from BR&I senior management for the Consumer Price Index to be the measurement instead of the Wage Price Index, Mr O’Pray made an amendment to his draft of the Agreement changing the words ‘WA Cost Price Index’.[22] Mr O’Pray provided no explanation as to why he chose these particular words.
Despite having had the conversation with Mr Heath, Mr O’Pray forgot having done so. As a result, prior to INPEX approving the draft of the Agreement he did not seek approval internally from BR&I or externally from INPEX for a change from the Agreement to reference the “Consumer Price Index”.[23]
On 28 June 2021, INPEX approved the draft of the Agreement which had been provided to it. After receiving INPEX’s approval Mr O’Pray sent an email to the bargaining representatives confirming that:
“…[w]e have had approval on our rates to go to vote so we will send out tonight”.
Mr O’Pray says that his reference to “our rates” was a reference to the rates of pay and allowances submitted to INPEX for its approval. He concedes that he did not attach a copyy of the Agreement to this email to the bargaining representatives.[24]
Mr O’Pray also telephoned Mr Heath to confirm that he would be sending the proposed Agreement and explanatory material to employees. [25] Mr O’Pray says that during the telephone conversation:[26]
a.He said words to the effect that “they [INPEX] have approved Wage Price Index increases”.
b.Mr Heath responded with words to the effect of “what do you mean, I thought it was Consumer Price Index, we agreed Consumer Price Index”.
c.He responded with words to the effect of “we never agreed Consumer Price Index, let me go back and check”.
Mr O’Pray then contacted his colleague Mr Malcolm Beadle (Mr Beadle) who he says confirmed with Mr O’Pray that BR&I’s understanding was that Wage Price Index was the index which had been discussed and agreed and BR&I had never agreed to Consumer Price Index.[27]
On 28 June 2021 after speaking to Mr Beadle, Mr O’Pray sent Mr Heath a number of text messages in relation to what was the agreed index to calculate wage and allowance increases against each year. In those messages, Mr O’Pray directed Mr Heath to Mr Heath’s 10 May 2021 email where Mr Heath requested increased rates based on ‘wage price increase’.[28]
The text message exchange was as follows:[29]
“TO: I’ve spoken to Damien [CLANCY], can you reply to me email and I’ll get the doc out for vote tonight
DH: Done. [thumb up emoji] [thumb up emoji]
TO: Call me urgent
TO: Before I go and highlight to the executive and go back around there’s nothing that can be done with WPU
TO: WPI
DH: This isn’t what was agreed.
TO: Malcolm and I are convinced we discussed WPI, it’s a two misunderstanding :)
TO: Yer mate, not saying anyone is right or wrong just trying to get it to the right place
TO :)
TO: You requested WPI on 10 May?
TO: Confirming our conversation we agree WPI based on previous. I have spoken with Simon [Hoffman, Project Director INPEX] we can’t revert to CPI. Doug I appreciate the integrity with which you’ve handled this.
DH: [thumb up emoji] [thumb up emoji]”
Mr Pray says that he presumed that the thumbs up emojii indicated Mr Heath’s agreement to the use of the WA Wage Price Index. Mr Heath says that he was merely acknowledging that the company’s position was that it would not agree to the use of the Consumer Price Index. Mr Heath says that he anticipated that his members would decided whether they were happy with the offer put by the company when the proposed Agreement was balloted.[30]
Mr O’Pray says that he subsequently telephoned Mr Heath to confirm that he was aware that it was the Wage Price Index which was the agreed index. Mr O’Pray says that Mr Heath said words to the effect of “that will teach me to put things in writing”.
Following his text conversation with Mr Heath, Mr O’Pray arranged for the proposed Agreement and access period material to be sent to Employees that night. [31] However, the version of the Agreement distributed to Employees contained a reference to “WA Cost Price Index” and not to “WA Wage Price Index” in clause 22.1 as follows:[32]
“The hourly rates of pay and allowances contained in clause 21 and Appendix 1
respectively, will be adjusted, on the first full pay period after the anniversary of the
Commencement Date for each year in accordance with the following table, unless
otherwise specified:
| Timing first full pay period on or after: | 1 July 2022 | 1 July 2023 | 1 July 2024 |
| Percentage of escalation: | 4% | 2.5% | 2.5% |
| Shall increase by the nominated percentage or the WA Cost Price Index (calculated based on the March quarter annual result for the relevant year) whichever is greater, on the first full pay period commencing after. | |||
An explanatory document was utilised during the access period to explain the effect of the Agreement’s terms, and particularly the changes from the Previous Agreement (Explanatory Document). The Explanatory Document relevantly provided:[33]
| “22. RATES AND ALLOWANCES ADJUSTMENT | • 1 July 2022 – 4% |
| Appendix 1 | • This clause outlines the rates of pay for each type of work. • Note, these rates escalate at the escalations noted in clause 22.” |
Every employee who was to be covered by the Agreement and who was employed by BR&I during the access period received the Explanatory Document, as well as a copy of the Agreement.[34]
The same night Mr O’Pray sent an email to Mr Heath and Mr Clancey attaching the access period material, including the Explanatory Document relating to the Agreement.[35]
On 1 July 2021 Mr O’Pray held a conference call with the Employees to explain the terms of the Agreement. While doing so Mr O’Pray realised that the Agreement referred to “WA Cost Price Index” and informed his superiors within BR&I of this fact. BR&I decided to continue with the access period despite the reference to “WA Cost Price Index” and the confusion and ambiguity that this term created. According to Mr O’Pray BR&I did so because the Perth Consumer Price Index and the WA Wage Price Index had been closely aligned over the previous few years and that there was:[36]
“… a sensitivity with the industrial circumstances in West Australia at the time which meant that we [BR&I] wanted to finalise the agreement promptly”.
Mr Heath says that the general understanding of his union’s members was that the phrase ‘WA Cost Price Index’ in the proposed agreement meant the Consumer Price Index. He asserts that the union members looked only at the proposed agreement and did not consider the Explanatory Documents. [37] Mr Heath did not identify which Employees conveyed this information to him and no direct evidence from any Employees was provided in relation to this issue by either the AWU or the CEPU.
A majority of Employees endorsed the Agreement and BR&I filed an application for the Agreement to be approved.
The Agreement was approved by the FWC on 27 July 2021 and commenced operation seven days later.[38]
Mr Heath and Mr Lipscombe met with representatives of BR&I on 10 June 2022. Mr Heath and Mr Lipscombe say those representatives confirmed that BR&I intended to apply the Consumer Price Index to escalate wages on 1 July 2022.[39] In cross examination Mr Lipscombe conceded that the BR&I representatives said words to the effect that “…if that is what the Agreement is then we will need to pay it”.[40]
BR&I say it decided that it would pay employees’ rates and allowances based on the Consumer Price Index (based on the Perth, March quarter results) as a gesture of goodwill until it could resolve the ambiguity created by the use of the term ‘WA Cost Price Index’ in clause 22.1 of the Agreement.[41]
A proposed amended agreement was prepared with input from the Offshore Alliance. In addition to the change to clause 22.1 to remove the reference to ‘WA Cost Price Index’ and replace it with a reference to the Wage Price Increase, a number of other proposed changes were also included in the proposed amended Agreement at the request of the Offshore Alliance. The proposed amendments included changes to casual conversion, training and income protection. [42]
On 14 October 2022, information packs including a copy of the proposed amended agreement and a summary of changes document was provided to the Employees. [43]
In the summary of changes document Trace explained: [44]
“Background
As per our pervious communications the 2021 Trace Offshore Enterprise Agreement (EA) contained a drafting error resulting in ambiguity when interpreting clause 22.1 “Rates & Allowances Adjustment”. TRACE is asking its employees to approve a proposed variation of the EA to rectify this issue. In recognition of the impact this may have had on our people we have proposed a Lump Sum Payment and minor changes to the EA (summarised below).
What will happen in the event of a no vote?
This is a significant issue for our business, it must be resolved. We have decided to ask our employees to vote on the proposal. We believe giving our people the opportunity to have their say in this process is 100% the right thing to do. Should a “no” vote eventuate we will need to consolidate and consider our next steps. However, in the interest of transparency we may apply to the Fair Work Commission to have them vary the EA based on ambiguity or uncertainty.”
The proposed amended agreement did not receive majority support from the workforce.[45]
After the amendment vote was unsuccessful, on 1 November 2022, Employees were notified that BR&I intended to make an application to the FWC to resolve an ambiguity or uncertainty contained in clause 22.1 of the Agreement. [46]
Consideration
Section 217 of the Act provides the following:
“Variation of an enterprise agreement to remove an ambiguity or uncertainty
The FWC may vary an enterprise agreement to remove an ambiguity or uncertainty on application by any of the following:
(a) one or more of the employers covered by the agreement;
(b) an employee covered by the agreement;
(c) an employee organisation covered by the agreement.
If the FWC varies the enterprise agreement, the variation operates from the day specified in the decision to vary the agreement.”
BR&I is an employer covered by the Agreement and therefore has standing to make the Application.
The discretion to vary an agreement may only be exercised if the FWC is satisfied that an ambiguity or uncertainty exists.[47] The terms ambiguity and uncertainty are not synonymous terms. There may, for example, be uncertainty in an enterprise agreement even when its terms are not ambiguous.[48]
The process of identifying ambiguity or uncertainty involves making an objective assessment of the words used in the provisions under examination. The words used must be construed having regard to their context.[49]
Determining whether a provision in an agreement is ambiguous or uncertain is not the same process as determining the proper construction of a provision of an agreement. As a consequence, the FWC is not bound to only consider those principles developed for the interpretation of enterprise agreements. The FWC is obliged to take into account, amongst other things, the equity, good conscience and the merits of the matter in accordance with section 578 of the FW Act. In doing so, pursuant to section 591 of the FW Act, the FWC is not bound by the rules of evidence nor procedure in relation to the matter. [50]
The mere existence of rival contentions as to the meaning or application of a provision or provisions in an enterprise agreement is not sufficient to indicate ambiguity or uncertainty for the purposes of section 217 of the FW Act.[51] However, the FWC will generally err on the side of finding an ambiguity or uncertainty exists where there are rival contentions advanced and an arguable case is made out for more than one contention.[52]
Clause 22.1 of the Agreement provides as follows:
“The hourly rates of pay and allowances contained in clause 21 and Appendix 1 respectively, will be adjusted, on the first full pay period after the anniversary of the Commencement Date for each year in accordance with the following table, unless otherwise specified:
Timing first full pay period on or after: 1 July 2022 1 July 2023 1 July 2024 Percentage of escalation: 4% 2.5% 2.5% Shall increase by the nominated percentage or the WA Cost Price Index (calculated based on the March quarter annual result for the relevant year) whichever is greater, on the first full pay period commencing after.
The AWU and CEPU submit that the phrase ‘WA Cost Price Index’ is not ambiguous because the phrase is not capable of more than one meaning and was understood by Employees, the Unions and BR&I to mean the Consumer Price Index for Perth. BR&I dispute this.
I am satisfied that the phrase on its face and in the context in which it was used does not unambiguously identify any existing recognised index against which wage escalations can be determined nor does it provide certainty as to how wage escalations ought be calculated.[53]
a.The parties agree that there is in fact no such thing as the ‘WA Cost Price Index’.
b.The ABS does not maintain a consumer price index for WA. The consumer price indexes are maintained on a city by city basis.
c.The Wage Price Index indexes are maintained on a State by State basis.
d.On the evidence before me the AWU withdrew its proposal that the relevant index would be the WA Wage Price Index before BR&I confirmed its agreement to the use of that index.
e.BR&I indicated that neither it nor its client would concede to having the Consumer Price Index as the relevant index for escalations.[54]
f.The Explanatory Document stated that wages would be escalated by reference to the WA Wage Price Index however the Agreement does not use this phrase. [55]
g.An effort to vary the Agreement to reflect the language in the Explanatory Document was rejected by the workforce. [56]
h.Subsequent payment of escalations by BR&I was done without concession with respect to the meaning of the phrase in the Agreement.[57]
I also note that notwithstanding that the Unions say the Employees understood the phrase WA Wage Price Index to mean the Consumer Price Index for Perth there is no direct evidence of what Employees understood the phrase to mean.
On the evidence before me I am satisfied that clause 22.1 is ambiguous and uncertain.
Having been satisfied that uncertainty or ambiguity exists it is necessary to decide whether it is appropriate to exercise the discretion to vary the Agreement, and if so, what variations should be made.[58]
In exercising the discretion to vary an agreement, the FWC should have regard to the mutual intention of the parties at the time the agreement was made.[59] The task is to place the parties in the position they intended by their agreement – insofar as the wording of the agreement does not reflect that intention. [60]
It is relevant to note that under the current statutory regime unions are not parties to the enterprise agreements. As explained by Deputy President Sams in determining the mutual intentions of the parties in a section 217 application in Application by MSS Security Pty Ltd:[61]
“[111] That is not to ignore the Union’s strenuous opposition to the MSS view or that the Union does not have the right to express its view and to have its intentions taken into account in its statutory capacity as an employee bargaining representative. However, what is important to understand is that under the scheme of the Act, Unions are no longer parties to enterprise agreements, as that notion had been understood for many years (save for greenfields agreements). This is not to demean or reduce the importance of the unions as direct bargaining representatives or default bargaining representatives for employees and for unions to be covered by the Agreement (s 201(2)), but the scheme of Part 2-4 of the Act, makes it plain that the emphasis in bargaining is on agreements reached between employers and employees. In my view, the distinction between being ‘covered’ by an enterprise agreement to being a ‘party’ to an agreement is not merely a distinction without a difference. It is why I consider the views and understanding of the employees as disclosed by their actions (what they understood they were voting for) as imperative to understanding their intention. These are not subjective views, but objective intentions. This discourse plainly demonstrates to me that mutual intention is not to be exclusively found in the intentions of the Union. Rather, it is the mutual intention of the employees to be covered by the agreement and the employer to which the prime focus should be directed.”
The exercise of the discretion conferred on the FWC to vary an agreement which is ambiguous or uncertain does not give rise to a general discretion to determine the matter based on industrial fairness.[62]
The task of identifying the objectively ascertained mutual intention of the parties does not depend on evidence of what each party says they intended. It is a more confined task.[63]
Although a significant factor, the objectively ascertained mutual intention of the parties is not the only consideration. However, it would be unusual for other considerations to weigh in favour of a variation that was inconsistent with the intention of the parties.[64]
The evidence is that:
a.There was never any mutual intention that a WA Cost Price Index be the relevant index to determine wage escalations in any event no such index exists. This was merely a notation made by Mr O’Pray to prompt him to revisit the issue.
b.On 10 May 2021 the AWU proposed that the relevant index be the Wage Price Index.[65]
c.On 13 May 2021 BR&I indicated that it was not yet in a position to agree the escalation rate.[66]
d.In June 2021 the AWU proposed that the Consumer Price Index should be the relevant index.[67]At the time Mr O’Pray indicated that he did not oppose this. [68]
None of the draft agreements circulated by BR&I to the AWU and tendered in the proceedings make reference to an index for escalation until the version of agreement which was circulated to Employees on 28 June 2021. On the evidence before me it is not until 28 June 2021 BR&I first confirmed that it was agreeable to the Wage Price Index being the relevant index and that it did not agree to the Consumer Price Index being the relevant index. I note this is after the AWU withdrew its proposal that the Wage Price Index be the relevant index and made it clear that it pressed for the Consumer Price Index to be the relevant index.
BR&I point to Mr Heath’s thumbs up emojii’s as evidence that the AWU agreed to the use of the Wage Price Index being the relevant index.[69] However BR&I did not amend the draft of the Agreement to reflect this understanding, if in fact it was in truth their understanding that this was the common intention of the parties.
To the contrary BR&I consciously decided to continue with the access period despite being aware that:[70]
a.the Agreement did not contain the words it says the parties agreed;
b.instead referred to a “WA Cost Price Index”
c.the use of this term could result in confusion and ambiguity
d.the Explanatory Document referred to a different index.
This was not a matter of oversight or genuine mistake discovered after ballot and/or approval of the Agreement. BR&I were aware of the ‘error’ at a time at which it could have terminated the access period and corrected the error so that the Agreement reflected what BR&I say was the common intent of the parties. BR&I chose not to because of ‘industrial sensitivities’.[71]
Given that Employees subsequently refused to approve a variation to the Agreement to clarify that the appropriate index was the WA Wage Price Index notwithstanding being offered ‘sweeteners’ to do so it seems quite probable that if BR&I corrected the ‘error’ at that time the Agreement approval process would have been delayed and/or resulted in different terms in the Agreement.
Notwithstanding that the Agreement did not identify an existing index, nor either of the indexes proposed by the parties during the course of the negotiations and that the Explanatory Document referred to Wage Price Index neither the AWU or the CEPU insisted that the correction be made to the words of the Agreement before the Agreement was balloted and then approved by the FWC.
The AWU were contemporaneously on notice following the text exchange between Mr O’Pray and Mr Heath that the question of the relevant index was in dispute. The Explanatory Document was sent to both Unions. The Explanatory Document clearly stated that the relevant index would be the Wage Price Index. The Agreement did not refer to the Wage Price Index, did not identify an existing index and did not clearly state that the Consumer Price Index would be the relevant index. The bargaining representatives for both unions are highly experienced negotiators. Mr Heath clearly understood the existence of, and distinction between, the different indexes maintained by the ABS.
Mr Heath asserts, without identifying which or how many Employees, that Employees conveyed to him that they understood the proposed agreement intended to refer to the Consumer Price Index. Mr Heath’s evidence in this regard was brief and vague. No direct evidence from any Employees was provided in relation to this issue by either the AWU or the CEPU about this alleged understanding or how Employees reconciled this assumption with the clear language contained with the Explanatory Declaration. There is no evidence tendered or submissions made to explain why Employees might be unwilling to be called to give such evidence.[72]
What can be inferred from the conduct of the Unions and the employer in this matter is that there was no common intention about the appropriate escalation index. The employer and the Unions chose to proceed with an ambiguous term so that the Agreement approval process would proceed and the Agreement be registered. The proverbial ‘can’ was instead ‘kicked by down the road’ by everyone.
The task of the FWC in applications of this nature is to place the parties in the position they intended by their agreement – insofar as the wording of the agreement does not reflect that intention. [73] I am not satisfied on the evidence before me that an agreement had been reached or a mutual intention existed with respect to the appropriate index.
The exercise of the discretion conferred on the FWC to vary an agreement which is ambiguous or uncertain does not give rise to a general discretion to determine the matter based on industrial fairness.[74]
BR&I submit that notwithstanding a finding that I am unable to discern a mutual intention I should find in its favour by reference to the following findings of the Full Bench in United Voice v MSS Security Pty Ltd[75] on an appeal from the decision of Deputy President Sams in Application by MSS Security Pty Ltd[76]:
“[23] It is possible in this case that the parties had different intentions as to the use of the words “all purpose”. The resolution of the matter requires the application of the following logic. If an ambiguity exists in relation to the payment of an additional amount, as in this case, and the evidence establishes that there is no mutual intention to pay the additional amount, then it would normally follow that the Commission should not vary the agreement to create an entitlement that is consistent with the intention of only one of the parties. Even if there is no clear mutual intention to not pay the additional amount, it would normally be desirable to resolve an ambiguity to make it clear that the amount is not payable when there is an insufficient basis to find that the parties agreed to pay the additional amount. Therefore, if there was no mutual intention to apply penalty calculations to the allowance, then absent any other compelling circumstance, the company’s application was likely to succeed.”.
In Application by MSS Security Pty Ltd[77] a prior history existed of the application of the contested clause without payment of the additional amount over multiple successive agreements approved by the relevant employees. This was considered evidence of a mutual intention on the part of at least the employer and relevant employees. According to Deputy President Sams:[78]
“Correcting the ambiguity by variation will not rewrite the provision. It will do no more than clarify existing, longstanding and well understood arrangements.”
There is before me no evidence that prior Agreements contained the disputed phrase or of the application of the Consumer Price Index or the WA Wage Price Index to escalations in the past.
I note than in this matter the Employees subsequently refused to approve a variation to the Agreement to clarify that the appropriate index was the WA Wage Price Index notwithstanding being offered ‘sweeteners’ to do so. It might be implied from this that Employees would not have approved an Agreement which clearly stated that that the relevant index would be the WA Wage Price Index.
Given the then existing ‘industrial sensitivities’ it may have been the case that BR&I’s client might have revisited its position with respect to the use of the Consumer Price Index particularly given that at the relevant point in time a significant disparity between the Wage Price Index and the Consumer Price Index was unexpected. That this would have occurred appears more likely given BR&I has since Agreement commencement applied the Consumer Price Index to escalations.
I note that in United Voice v MSS Security Pty Ltd[79] the variation proposed would have resulted in the payment of backpay. In this Application a variation effective from commencement of the Agreement could result in the subsequent recovery of monies paid to Employees potentially causing hardship to those Employees.
Most relevantly I note that BR&I were aware of the ‘error’ in the Agreement and its inconsistency with the Explanatory Document and nevertheless proceeded with the ballot and approval process in circumstances where a risk existed that the Agreement was not genuinely agreed by the Employees.
As noted by the Full Federal Court in Bianco Walling Pty Ltd v CFMMEU:[80]
“Although Commonwealth legislation governing industrial relations has from its inception vested in arbitral bodies with the power to vary registered industrial agreements, it has generally confined the circumstances in which that power may be exercised. There has been an evident legislative intention that intervention by the arbitral body into matter on which the parties themselves have agreed in the manner for which the legislation provides should be limited. It also reflects a legislative intention that the circumstances in which industrial agreements may be varied during their currency should be confined.”
Consistent with this in Application by Australian and International Pilots Associate Vice President Watson held that:[81]
“It is not appropriate to rewrite an agreement or install something that was not inherent to the agreement when it was made. These principles reflect the notion that an agreement is made by the parties usually without any arbitrated content or independently determined standards of industrial fairness.”
Section 217 does not vest in the FWC the power to choose between the opposing positions of parties and impose on a party a term in an enterprise agreement that it did not and would not have agreed to. Nor should it because the industrial reality is that enterprise agreements are negotiated as a package. A concession not possible in relation to an isolated clause may well be palatable as part of an overall package.
In the absence of a meeting of minds between the parties with respect to the index for escalation the appropriate mechanism to resolve this matter is for the parties to negotiate a variation to the Agreement which is mutually acceptable. The next escalation is not scheduled to occur until July 2023. Such a process provides the parties with the flexibility to negotiate more broadly and find a mutually agreeable outcome. It may be that a party is prepared to concede their position in relation to escalation in exchange for some other variation to the Agreement. If considered of assistance by the parties this process could be facilitated by the FWC.
DEPUTY PRESIDENT
[1] Digital Court Book (DCB) at 265.
[2] Warrell v Walton (2013) 233 IR 335, 341 [22].
[3] DCB 11-266.
[4] DCB 582-587.
[5] DCB 586-592.
[6] DCB 11, 265.
[7] DCB 11.
[8] DCB 11, 265.
[9] DCB 11, 265.
[10] DCB 11-12, 265.
[11] DCB 12.
[12] DCB 12, 17.
[13] DCB 403-404.
[14] DCB 274, 282.
[15] DCB 275, 304-402.
[16] DCB 280.
[17] DCB 275.
[18] DCB 12, 276.
[19] DCB 276.
[20] DCB 12.
[21] DCB 418.
[22] DCB 12, 276.
[23] DCB 13.
[24] DCB 277.
[25] DCB 13.
[26] DCB 278.
[27] DCB 278.
[28] DCB 278.
[29] DCB 13,19-20.
[30] DCB 583.
[31] DCB 14, 23-24.
[32] DCB 111.
[33] DCB 14, 150.
[34] DCB 14.
[35] DCB 278.
[36] DCB 14, 279.
[37] DCB 583-584.
[38] [2021] FWCA 4538.
[39] DCB 584-585, 588-592.
[40] Transcript PN463.
[41] DCB 15, 31, PN349.
[42] DCB15.
[43] DCB15,163-266.
[44] DCB 15, 164.
[45] DCB 15.
[46] DCB 15.
[47] Bianco Walling Pty Ltd v CFMMEU [2020] FCAFC 50 at [3].
[48] Bianco Walling Pty Ltd v CFMMEU [2020] FCAFC 50 at [75].
[49] [2019] FWCA 979 at [11].
[50] Bianco Walling Pty Ltd v CFMMEU [2020] FCAFC 50 at [68]
[51] Tenix Defence Systems Pty Limited Certified Agreement 2001-2004 [2002] AIRC 531 at [49].
[52] [2019] FWCA 979 at [11], Bianco Walling Pty Ltd v CFMMEU [2020] FCAFC 50 at [70], Tenix Defence Systems Pty Limited Certified Agreement 2001-2004 [2002] AIRC 531 at [31].
[53] DCB 271.
[54] DCB 13,19-20.
[55] DCB 14, 150.
[56] DCB 15.
[57] Transcript at PN463.
[58] Application by Bradnam’s Windows and Doors Pty Ltd [2019] FWCA 979 at [11], Australian and International Pilots Association [2007] AIRC 303 at [17].
[59] Application by Bradnam’s Windows and Doors Pty Ltd [2019] FWCA 979 at [11], Re Australian and International Pilots Association[2007] AIRC 303 at [17].
[60] Application by Bradnam’s Windows and Doors Pty Ltd [2019] FWCA 979 at [11], Australian and International Pilots Association [2007] AIRC 303 at [17].
[61] [2016] FWCA 2774 at [111].
[62] Australian and International Pilots Association [2007] AIRC 303 at [17].
[63] Australian and International Pilots Association [2007] AIRC 303 at [18].
[64] Australian and International Pilots Association [2007] AIRC 303 at [17].
[65] DCB 12, 17.
[66] DCB 274, 282.
[67] DCB 12.
[68] DCB 12, 276.
[69] BR&I led no evidence with respect to the intentions of the CEPU.
[70] DCB 14.
[71] DCB 14, 279.
[72] Cf: Australian Workers Union v Woodside[2023] FWC 249.
[73] [2019] FWCA 979 at [11], Australian and International Pilots Association [2007] AIRC 303 at [17].
[74] Australian and International Pilots Association [2007] AIRC 303 at [17].
[75] [2016] FWCFB 4979 at [23].
[76] [2016] FWCFB 2774.
[77] [2016] FWCFB 2774.
[78] Re MSS Security Pty Ltd[2016] FWCA 2774 at [110].
[79] [2016] FWCFB 4979 at [23].
[80] [2004] FCAFC 50 at [50].
[81] [2007] AIRC 303 at [17].
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